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DECISION No

DECISION No. 7/1998/QD-BCN OF FEBRUARY 2, 1998 TO ISSUE THE "REGULATION ON THE APPRAISAL, APPROVAL AND MANAGEMENT OF ASEAN INDUSTRIAL COOPERATION (AICO) ARRANGEMENTS

THE MINISTER OF INDUSTRY

Pursuant to Decree No. 74-CP of November 1, 1995 on the functions, powers and organizational structure of the Ministry of Industry;

Pursuant to the Prime Minister's decision in Official Dispatch No. 1869/VPUB of April 22, 1996 on the Agreement on ASEAN Industrial Cooperation (AICO);

On the basis of the framework agreement on ASEAN Industrial Cooperation signed by the ASEAN countries' economic ministers on April 27, 1996 in Singapore;

Considering the requirements of work,

DECIDES:

Article 1.- To issue together with this decision the Regulation on the appraisal, approval and management of the ASEAN Industrial Cooperation (AICO for short) arrangement.

Article 2.- This Decision takes effect 15 days after its signing.

Article 3.- The ministries, the ministerial-level agencies and the agencies attached to the Government, the People's Committees of the provinces and cities directly under the Central Government shall provide guidance for enterprises to implement the Regulation issued together with this Decision.

The Minister of Industry

DANG VU CHU

REGULATION ON THE APPRAISAL, APPROVAL AND MANAGEMENT OF THE ASEAN INDUSTRIAL COOPERATION (AICO) ARRANGEMENTS

(issued together with Decision No. 7/1009/QD-BCN of February 2, 1998 of the Minister of Industry)

Chapter I

GENERAL PROVISIONS

Article 1.- This Regulation shall apply to enterprises of all economic sectors which are established under Vietnamese laws, legally registered and operating in Vietnam

Article 2.- The appraisal, approval and management of the ASEAN Industrial Cooperation arrangements in compliance with the articles of the framework Agreement on ASEAN Industrial Cooperation are specified in this Regulation.

Article 3.- In this Regulation, the following terms are construed as follows:

1. The "AICO program" is the ASEAN Industrial Cooperation program in compliance with the framework Agreement on the ASEAN Industrial Cooperation program signed by the ASEAN countries' economic ministers on April 27, 1996 in Singapore.

2. The "AICO arrangement" is a cooperation arrangement set up in conformity with the AICO program and participated by at least two countries and each of which has at least one company participating in the AICO arrangement.

3. "Participant countries" are the ASEAN member countries that have companies participating in the AICO arrangement.

4. "Participant companies" are companies established under Vietnamese laws, legally registered and operating in Vietnam and participating in the AICO arrangement.

5. " AICO products" include:

a/ The final products which are the final output in an AICO arrangement as the final products that do not need further processing, or

b/ The intermediate products which are the products used as input in an AICO arrangement for the creation of final AICO products, or

c/ Raw materials which are raw materials used as input in an AICO arrangement for the creation of AICO intermediate or final products.

6. Certificates of Eligibility (COE for short) are certificates granted by the ASEAN Secretariat to the participant companies after the application for the establishment of an AICO arrangement has been approved by the participant countries.

7. "Competent national agencies" are Vietnamese agencies with the State management function which join efforts in appraising and approving AICO arrangements and managing their operations in Vietnam according to Decision No. 1896/VPUB of April 22, 1996 of the Prime Minister, which stipulates:

- The Ministry of Industry is the coordinating agency having the prime responsibility while the Ministry of Planning and Investment and the concerned agencies coordinate in appraising and approving applications for the establishment of AICO arrangements.

- The Ministry of Finance shall be responsible for setting preferential tax rates.

- The Ministry of Trade shall be responsible for issuing non-tariff privilegecs and dealing with the origin of goods.

8. The "AICO Assessing Board" is a board established by decision of the Ministry of Industry to assist the Minister of Industry in appraising, approving and managing the operations of AICO arrangements

9. The "chairman of the AICO Assessing Board" is a Vice Minister of Industry appointed by the Minister of Industry.

10. The "secretary of the AICO Assessing Board" is an expert of the International Relations Department of the Ministry of Industry appointed by the Minister of Industry.

11. "National equities" are equities contributed by Vietnamese legal entities (State-run, collective and private economic establishments) to the participant companies.

12. "ASEAN equities" are equities contributed by ASEAN legal entities (State-run collective and private economic establishments) contributed to the participant companies.

13. "Small and medium-sized enterprises" are enterprises with a capital less than 10 billion Vietnam dong and employing less than 500 laborers.

Chapter II

CRITERIA FOR ENTERPRISES TO ESTABLISH AICO ARRANGEMENTS

Article 4.-

1. Companies operating in Vietnam may apply for the establishment of AICO arrangements if they satisfy the following criteria and requirements:

a/ Being established under the Vietnamese laws

b/ being registered and operating in Vietnam

c/ Having at least 30% of national equities.

2. The requirement of having at least 30% of national equities mentioned in Point c, Clause 1 of this Article may be considered for a waiver by a competent national agency if the participant company meets the following additional requirements:

a/ The local content of AICO products must reach more than 30% before the year 2000 and

b/ One of the four following requirements:

- Pledging to export 50% or more of AICO products,

- Having at least 40% of ASEAN equities,

- Producing new advanced products by using a new design, formula, method or process or a new model not available in Vietnam

- Being a small or medium-sized enterprise.

2. Participant companies in Vietnam and participants companies in other ASEAN countries shall have to make written commitment to resource sharing or industrial complementation cooperation in the fields of technology transfer, production, training, license grant, sale contracts and marketing, including domestic and overseas markets, or other fields of cooperation.

Chapter III

AICO PRODUCTS

Article 5.-

1. All products outside the general exclusion list announced by the Ministry of Finance under Article 9 of the CEPT Agreement are suitable for the AICO program and may become AICO products.

2. AICO products must be codified in conformity with the goods codes on Vietnam's list of import and export goods.

3. Every AICO product must comply with the Regulation on the Origin of Goods of the CEPT Agreement. The certificates of goods origin shall be granted by Vietnam's Ministry of Trade.

Chapter IV

PRIVILIGES

Article 6.-

Companies participating in AICO arrangements shall be entitled to the following privileges:

a/ Import tax rates of 0 to 5% for AICO products (equal to CEPT tax rates for the same products by the year 2006 according to CEPT's tax reduction schedule already approved by the Government).

b/ Non-tariff incentives to be separately stipulated by the Ministry of Trade.

Chapter V

PROCEDURES FOR AICO ARRANGEMENT APPLICATION AND APPROVAL

Article 7.- Companies that satisfy the criteria stated in Article 4 and wish to participate in AICO arrangements should submit applications for establishment and relevant documents to the Chairman of the AICO Assessing Board, the Ministry of Industry, located at 45 Hai Ba Trung, Hoan Kiem district, Hanoi city. An application for establishment of an AICO arrangement and attached relevant documents, which constitute a dossier, shall be made in seven Vietnamese versions and two English versions. The attached documents include:

1. The papers evidencing the company's legal person status (the establishment permit, the registration certificate or equivalent documents).

2. The financial statement already audited in accordance with Vietnam's regulations of the year preceding the year of application. For a newly established company, it may submit a report on its present financial status certified by a financial agency that manages the company under the authorization of the State.

3. A copy of the written commitment or cooperation contract on resource sharing, industrial complementation or industrial cooperation activities of the company with other participant companies from ASEAN countries.

4. The lawful papers authorizing the parties' representatives to sign the application.

5. Company profile (capital, types of products, capacity, number of workers and employees, etc.)

6. In cases where a company fails to meet the requirement of 30% of national equities, the following documents are additionally required:

a/ The written commitment to reach the local content of over 30% of AICO products before the year 2000, and

b/ One of the four following requirements:

- The commitment to export more than 50% of AICO products,

- Proving the possession of at least 40% of ASEAN equities,

- Proving that AICO products are new and advanced products made by a new design, formula, method or process or a new model not available in Vietnam.

- Being a small or medium-sized enterprise.

Article 8.-

1. Within 10 working days from the date of receipt of the dossier of application for the establishment of an AICO arrangement from the applicant company(ies), the secretary of the AICO Assessing Board shall appraise the dossier and may ask the applicant company(ies) to complete the dossier if it is invalid or incomplete. If the dossier is complete, the secretary of the AICO Assessing Board shall notify the applicant company(ies) of the date of official receipt of the valid application for the establishment of an AICO arrangement.

2. Within 60 working days from the date of official receipt of the valid dossier, the AICO Assessing Board under the Ministry of Industry shall coordinate with the competent national agencies in appraising the dossier of application for the establishment of an AICO arrangement After such dossier has been assessed by the AICO Assessing Board, it shall be sent to the Ministry of Planning and Investment, the Ministry of Trade, the Ministry of Finance, the General Department of Taxation and the General Department of Customs for consideration and written comments. If these agencies agree in their written comments the Ministry of Industry shall approve the dossier and inform the participant countries and the ASEAN Secretariat thereof. In case of disagreement, the Ministry of Industry shall directly hold an inter-ministerial meeting to consider and decide the matter.

3. Within 14 days from the date of receipt of the notice on the approval of the application for the establishment of an AICO arrangement of Vietnam and other participant countries, the ASEAN Secretariat shall consider and grant the certificates of eligibility (COE) to the participant companies. After receiving the COEs from the ASEAN Secretariat, the Ministry of Industry shall send them to the participant companies and their copies to the Ministry of Finance, the Ministry of Trade, the General Department of Taxation and the General Department of Customs.

4. After receiving the COEs, the participant companies shall complete the procedures set by the Ministry of Finance, the Ministry of Trade, the General Department of Taxation and the General Department of Customs for registration of their entitlement to tariff and non-tariff privileges for AICO products.

Chapter VI

ORGANIZATION OF IMPLEMENTATION AND MANAGEMENT OF AICO ARRANGEMENTS

Article 9.- An AICO arrangement may become operational after the participant companies receive the COEs from the ASEAN Secretariat and have registered with the Ministry of Finance, the Ministry of Trade, the General Department of Taxation and the General Department of Customs.

Article 10.- The approval of an AICO arrangement shall not limit the number of the initial participant companies. The subsequent applications of other companies that wish to make AIDCO products of the same kind shall also be considered if these companies satisfy the criteria specified in Article 4, Chapter II of this Regulation.

Article 11.-

1. From the date of receipt of the COE, every six months each participant company shall have to report in writing on the situation on the implementation of the AICO arrangement to the Ministry of Industry.

2. For participant companies that have committed themselves to export more than 50% of AICO products, annually they have to report on the situation of their exports to the Ministry of Industry. If they fail to export more than 50% of AICO products in the plan year, they must clearly report the reasons therefor and the plan for additional exports in the subsequent year. If they fail to fulfill the export plan as pledged for two consecutive years, the competent national agencies shall cancel the privileges stated in Article 6, Chapter IV of this Regulation.

3. For participant companies that pledge to achieve the local content over 30% of AICO products before the year 2000, if past this time limit they fail to achieve the above-mentioned percentage, the competent national agencies shall also cancel all privileges stated in Article 6, Chapter IV of this Regulation.

Article 12.- Participant companies shall be allowed to use AICO raw materials and intermediate AICO products only for the production and creation of AICO products approved in the COEs. If they are detected having used them for other purposes, the competent national agencies of Vietnam may cancel the privileges stated in Article 6, Chapter IV of this Regulation and the offending companies shall have to pay all tax arrears for imported products which have been used for wrong purposes.

Article 13.- All disputes arising among the participant companies of ASEAN countries in relation to the interpretation or implementation of the AICO arrangement shall be, to a possible extent, settled through conciliation among the involved parties. If such disputes can not be reconciled, the participant companies may request the Ministry of Industry to bring them to the ASEAN Secretariat for settlement in accordance with the ASEAN Agreement on the Mechanism for the Settlement of Disputes.

Chapter VII

IMPLEMENTATION PROVISIONS

Article 14.-

1. This Regulation takes effect 15 days after the date of its signing.

2. In the course of implementation, this Regulation may be supplemented or amended by decision of the Minister of Industry

The Minister of Industry

DANG VU CHU

AICO ARRANGEMENT APPLICATION FORM

I. PROPOSING COMPANIES

A. Name of Company:

B. Country:

C. Official Address and

Phone and Fax No. :

D. Contact Person and

Designation :

E. Date of Incorporation:

F. Business Activities:

G. Capital Structure:

Local Other ASEAN Non-ASEAN

Amount % Amount % Amount %

Authorized

Subscribed

Paid-up

H. Justification of Waiver of 30% National Equity (Where Applicable)

I. Nominated Product (Final/Intermediate/Raw Material)

Description Classification HS Prevailing ASEAN Vulume Value

(Final/Intermediate Code Rate Content per unit per unit

No. %

II. DESCRIPTION OF RESOURCE SHARING, INDUSTRIAL COMPLEMENTATION OR INDUSTRIAL COOPERATION ACTIVITIES

III. SCHEMATIC DIAGRAM OF THE AICO ARRANGEMENT/PRODUCT FLOW

IV. JUSTIFICATION OF THE AICO ARRANGEMENT

V. OTHERS (TO BE SPECIFIEL)

VI. LIST OF DOCUMENT TO BE SUBMITTED

1. Copy of applicant's articles of incoporation/partnership and bylaws, certificate of incorporation or equivalent document.

2. Copy of applicant's audited financial statement (Previous year)

For newly established companies, which do not have audited financial statement, submission of certificate of incorporation would be sufficient.

3. Documentary evidence of resource sharing, industrial complementation or industrial cooperation activities.

4. Copy of company board resolution authorizing officer to sign in behalf of applicant enterprise.

5. Company Profile (type of product, capacity, No. of employee, etc.).-